Zebra Technologies cautious about market outlook and project deferrals
2023-07-30
The company's earning call meeting was held to discuss its future prospects and was attended by key participants including the Vice President of Investor Relations, the Chief Product and Solutions Officer, the Chief Financial Officer, and analysts from various firms. During the meeting, the company expressed a cautious outlook for the market due to the uncertain macro environment and observed cautious behavior.
For the full year, the company expects a decline in organic sales but remains optimistic about the potential to achieve the high end of the range. The second half of the year is anticipated to benefit from easier year-on-year comparisons, recently announced price increases, and favorable foreign exchange rates. However, given the uncertain market conditions, the company is taking a conservative view of its pipeline and actions.
The company highlighted project deferrals from large customers in the retail sector, particularly in North America and EMEA, which have led to a more conservative outlook for the funnel and pipeline in the second half of the year. It is important to note that these deferrals are not cancellations but rather decisions and deployments being postponed. The majority of these deferrals are expected to occur in Q3 and Q4.
Several key drivers of the company's business were discussed during the meeting. These include the growth in run rate business, particularly in small to medium deals, positive growth in the printing business, services, and software, expansion of market share in various segments, and a focus on operational expenditure (opex) spending for retail customers.
In terms of future plans, the company aims to diversify its customer base, grow its business, extend its channel network and partner community, focus on manufacturing opportunities, leverage synergies across acquisitions and its organic portfolio, and explore opportunities in machine vision and fixed industrial scanning.
The company's outlook for the quarter and year remains cautious due to the uncertain macro environment and observed cautious behavior. While a decline in organic sales is expected for the full year, the company is confident in its pipeline of opportunities and actions to potentially reach the higher end of the range. The second half of the year is anticipated to benefit from easier year-on-year comparisons, recently announced price increases, and favorable foreign exchange rates. However, given the uncertain market conditions, the company is taking a conservative view of its pipeline and actions. The project deferrals from large retail customers in North America and EMEA have also contributed to a more conservative outlook for the funnel and pipeline in the second half of the year.
The participants of the call included Mike Steele, Vice President of Investor Relations, Bill Burns, Chief Product and Solutions Officer, Nathan Winters, Chief Financial Officer, and various analysts from Stephens, Inc., UBS, Needham and Company, Northcoast Research, Cowen and Company, Morgan Stanley, Robert W. Baird and Company, William Blair and Company, and Credit Suisse. The call provided valuable insights into the company's future plans and growth prospects, with a diverse group of analysts and company executives engaging in a comprehensive discussion about the opportunities ahead.